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The Nigerian Telecommunication Industry: Analysis of the First Fifteen Years of the Growths and Challenges in the GSM Market (2001 – 2016)

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The Nigerian Telecommunication Industry: Analysis of the First Fifteen Years of the Growths and Challenges in the GSM Market (2001 – 2016) Proceedings of the World Congress on Engineering and Computer Science 2017 Vol I WCECS 2017, October 25-27, 2017, San Francisco, USA The Nigerian Telecommunication Industry: Analysis of the First Fifteen Years of the Growths and Challenges in the GSM Market (2001 – 2016) Nsikan Nkordeh, Ibinabo Bob-Manuel, Felix Olowononi Abstract- The introduction of GSM into the Nigerian market Communication (GSM) in 2001, there has been an has caused a positive disruption in the national paradigm; this unbelievable exponential growth in the number of has changed the way people, government and society interact subscribers from about a million to over a hundred million and conduct business. In the nineteenth and twentieth century, subscribers. the major means of communication were the telegraph, Telecommunication in itself has evolved throughout the telephony, wireless communication and the use of copper conductors [1]. This paper critically analyse the GSM market centuries from the analogue era with organizations such as under the Nigerian Telecommunication Industry.A profound INTELSAT and INMARSAT controlling the traffic of analysis of the growth of GSM market with existing market international messages with the limitation of services such challenges from 2001 till 2016 was critically analysed. In this as voice telephony, telex, facsimile, telegraphy etc. to the paper, we carried out a lot of research using what past digital era with the launch of satellites for Global Personal researchers have done as a foundation for this paper. From the Communication Systems (GMPCS), Voice Over Internet advent of the Global System for Mobile Communication Protocol (VOIP), the debut of companies and infrastructure (GSM) in 2001, the analysis of the annual growths in terms of provider to the telecommunication industry such as cable subscribers, revenue and market penetration was carried out broadcasting networks and introduction of Integrated as well as the causes of the challenges faced by the GSM market and how it played out in terms of loss of subscribers, Services Digital Network (ISGDN) [1]. foreign investments and the cost of operation by the companies. Prior to this revolution, the Nigeria Telecommunication Ltd In addition, the impact of the GSM market to the economy of was burdened with the responsibility of providing a means the nation as well as her citizens as it pertains to the growth of communication which was fundamentally the landline and challenges faced by the market. and it was ruined by flagrant inefficiency and corruption. This responsibility was taken over by the various GSM Index Terms— Telecommuncation, GSM Market,Growth network providers we have, the first of which was ECONET (which is known as Airtel today) was formally launched on I INTRODUCTION the 6th August, 2001 and Mobile Telephone Networks The Nigeria Telecommunication Ltd (NITEL) was (MTN) followed suit almost immediately. The renewable established in 1985 to help the nation in the development of GSM licenses which had a 5 year expiration date were the telecommunication sector. Telecommunications industry awarded to the operators and they were allowed to operate in Nigeria was underdeveloped until the deregulation of the within the 850 MHz and 1900 MHz spectrum bands. sector in 1992 and the formulation of a regulatory body Specifictargets had been set for the operators by the NCC known as the Nigerian Communications Commission and some of these targets were a minimum of a 100,000 (NCC) was established [1]. The mobile communication subscribers each in the beginning year of operations, 1.5 services made its entrance into the Nigerian million subscribers in the next five years, and a minimum of telecommunications market in 1993 with NITEL providing a 5% geographical coverage within each of the country’s national service alongside a Lagos Service provided by the geopolitical states. The NCC also made known that its main Mobile Telecommunications Services (MTS). Some of the goal is in achieving a comprehensive secure and efficient services provided by these companies were voicemail, mobile network. paging and voice services over the analogue E-TACS Studies have shown that the concurrent launching of three network. MTS shut down due to failure to pay service providers in the GSM market caused a growth interconnection charges to NITEL. opportunity similar to the rapid growth that happens in many The history of the Global System for Mobile individual markets. The intensity of the competition caused Communication in Nigeria can be traced back to the year an expansion in the packages offered at a better rate and the 2001 during the deregulation of the telecommunications introduction of value added services to attract and retain industry. It has been fifteen years since the GSM has been customers. set in place. Since the debut of the Global System of Mobile II. GROWTH OF THE GSM MARKET th Manuscript received March 19 , 2017; revised March 29, 2017. Global System for Mobile Communications (GSM) helps This work was funded by Covenant University,Ota Nigeria. Nsikan Nkordeh is a Lecturer & Researcher with Department of Electrical the nation in the growth of her economy as it makes and Information Engineering Covenant University Ota Nigeria, available an easy and efficient way of satisfying the [email protected] communication needs required to promote and enhance Oluyinka Oni is a Lecturer & Researcher with Department of Electrical and trade between Nigeria and her international partners [2]. It Information Engineering Covenant University Ota Nigeria, [email protected] also plays an important role locally in advocating the several Ibinaboob-Manuel is an IT consultant [email protected] government communication initiatives thereby connecting all the sectors of the nation’s economy together so as to attain a mutual aim. Most importantly, it supports ISBN: 978-988-14047-5-6 WCECS 2017 ISSN: 2078-0958 (Print); ISSN: 2078-0966 (Online) Proceedings of the World Congress on Engineering and Computer Science 2017 Vol I WCECS 2017, October 25-27, 2017, San Francisco, USA investment which promotes employment opportunities in the growth in the number of subscribers in this sector than any long haul. other as it affects the contribution to the GDP of the nation. At the nation’s micro economy, the GSM sector had an The GSM market in 2009 accounted for about 80% of the incredible contribution of 53% in 2003 to the nation’s Gross global market according to the estimates of the industry. The Domestic Product (GDP). In the year 2015, the GSM GSM mobile subscribers were dominant and were Market alongside other parts of the telecommunications responsible for about 98.45% of the total number of sector contributed 1, 645, 82 billion naira to the GDP of the technology subscribers at the end of December 2015 [4]. In nation in the final quarter of the year, that is, 8.8% [4]. the same year, the aggregate number of subscribers was Figure 1a is a graph that aptly shows the percentage 148,681,362 which is an increase of 8.78% or 12,004,756 in contribution of telecommunication to the uniform GDP price relation to the same month of the previous year. July 2015, as well as the annual growth [4]. marked as a watershed as all the licensed operators saw an The aggregate number of subscribers has risen exponentially increase in the number of subscribers every month prior to over the previous decade. Just from December 2014 to this month. After July 2015, only Airtel witnessed a uniform December 2015, the number of subscribers rose by 11.97 increase in its subscribers whilst MTN and Etisalat ended million which is an 8.61% increase [4]. However, there was the year with less subscribers than they had at the beginning a slight reduction in the growth when compared to the of the year. Figure 1b represented a chart of the four previous years and reasons where due to the already high Telecommunication Industries in Nigeria with respect to penetration of the market which gave little room for a their subscribers at the end of July 2015. significant expansion. This implies, there was a rapid Figure 1a: Comparison of Contribution to GDP and Annual Telecoms Growth Figure 1b: GSM Subscribers with Respect To July 2015 [11]. ISBN: 978-988-14047-5-6 WCECS 2017 ISSN: 2078-0958 (Print); ISSN: 2078-0966 (Online) Proceedings of the World Congress on Engineering and Computer Science 2017 Vol I WCECS 2017, October 25-27, 2017, San Francisco, USA From Figure 1b, we can deduce that in the year 2015, Airtel rural and urban divide. The family and social relationship and Globacom witnessed a growth in their number of has been significantly improved as well as the state of subscribers whereas Etisalat saw a decrease in their security in the nation. subscribers each month and MTN saw a decrease only in The growth of GSM market has improved the information November and December. At the end of the fourth quarter, accessibility, created jobs opportunities for both skilled and the number of subscribers with MTN and Etisalat were unskilled manpower hereby changing the tides of the way 1.99% and 5.67% lesser than it was in the third quarter. businesses were conducted before the advent of GSM [8]. Hence, there was an increase by 5.41% and 3.64% in the The telecommunications industry alongside the ICT sector number of subscribers of Globacom and Airtel. The increase created about 2.5 million jobs in over the last decade [9]. in the latter two operators surpassed the reductions by MTN and Etisalat with an overall increase in the number of subscribers by 0.17% within the same interval [4]. Consequently, Airtel and Globacom increased their share of the market to 21.70% and 22.19% respectively whereas MTN and Etisalat saw a decrease in their share of the market by 41.20% and 14.91% respectively [4].
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